Political hangover lingers over new tax

Prince George's Pacific Western Brewing Company is continuing to make beer despite earlier threats it would have to shut off the taps because of changes to the provincial government's tax policy.

Those changes would have seen the brewery hit with a massive tax bill for out-growing its micro-brewery status, but the Liberal government said it will address the problem next week, a decision that have left Deputy Premier Rich Coleman with a political hangover.

Officials in Coleman's office released a statement, saying an inadequate version of the tax policy was issued on Nov. 14. and a new one is on the way.

But the release of what the government is calling the faulty-tax policy has upset major brewers and forced Coleman to deny questions of political favouritism.

Coleman's officials said a new policy is being developed, and it includes fair taxation for smaller brewers that still allows them to expand.

"Seven B.C.-based breweries are in a position to grow and benefit from a revised taxation rate and this is really about helping our small breweries produce a made-in-B.C. product that creates jobs in our communities," said the statement.

"We consulted with industry in early 2012, and while commercial breweries opposed further transition because they believe small breweries already receive too much government assistance, small breweries supported a policy that gradually phased out the favourable taxation rate between 160,000 hectolitres and 400,000 hectolitres."

A hectolitre is equivalent to 100 litres of beer. Under the current policy, the higher tax rate the major brewers are charged kicks in when a brewery produces 160,000 hectolitres.

Pacific Western Brewing was about to hit the 160,000-hectolitre mark and the company stated it was considering layoffs or closure rather than pay the increased taxes.

Officials with Coleman's ministry did not confirm reports that the original, but now inadequate policy, would have resulted in tax savings of about $10 million for the smaller breweries.

But Coleman's motives for the tax-policy changes were questioned this week at news his Langley riding held a fundraising auction for the Liberals that included two trips to the Bahamas worth almost $27,000, donated by Pacific Western Brewing's president Kazuko Komatsu.

Coleman could not be immediately reached for comment, but his ministry said he does not deny receiving the trip donations, of which the proceeds from the auction went to the Liberal Party.